Industries in Southeast Asia on the cusp of a digital disruption wave
Southeast Asia’s digital landscape poses unique opportunities and challenges
Singapore, 27 May 2015 — Digital disruption has been accelerating worldwide, and organisations operating within Southeast Asia are quickly coming to realise that consumers are at the forefront, pushing for change, with some countries in the region picking up momentum faster than others.
This point was one of the highlights at a media session held today to mark the launch of the Deloitte Digital service for Deloitte Southeast Asia.
“Digital is part of an evolutionary journey and only one disruptor in a sea of disruptors”, says Jonathan Rees, Executive Director and Leader of Deloitte Digital in Southeast Asia. “The business landscape is more complex and businesses must face a tension between the realities of operating a business and responding to disruptive forces.”
Southeast Asia could very well be experiencing digital disruption very differently from more mature markets, such as the USA and Australia. These countries began their digital journey many years earlier, and their progression has been in stages, following the developments of digital reach and capabilities.
Countries in Southeast Asia are in a different playing field – the digital capabilities and know-how are ripe and ready to be harnessed – and they need not and/or cannot follow in the digital footsteps of the mature markets.
For example, instead of going through the evolution of personal mobile devices – from the pager, to the GSM mobile phone, to the smart phone – consumers in Southeast Asia can skip the steps and jump straight to using smart phones. In fact, a recent Deloitte paper states that smartphone penetration in Southeast Asia is expected to grow at a CAGR of more than 20% to reach an overall 38% of mobile subscriptions, a projection that translates into about 200 million smartphones.
With this changing reality, companies in the region are faced with a rapidly evolving consumer profile, and are in danger of lagging behind in their consumer engagement efforts.
While organisations in Southeast Asia can look to global trends to gain an insight into what might disrupt their future, macro and micro economic factors such as the population composition, industry profile, social and internet penetration will shape how they play out. For example, while a cashless society may be possible in a country like Singapore, in countries with low consumer protection and lower smartphone penetration, Cash-On-Delivery will likely remain an area of rapid local innovation.
“Digital is the CEO’s next battleground,” says Mr Rees. “It is the speed and thoughtfulness with which businesses respond in the digital age that determines their future.”
“Whether companies prosper in Southeast Asia over the coming decade will depend on their CEO’s willingness to embrace digital. As the engine room for growth in emerging markets, responsibility for digital cannot be delegated. It must start at the top,” Mr Rees continues.
Many organisations, large and small, both public and private, understand the opportunities of digital. The launch of innovative initiatives such as Singapore’s IDA Smart Nation and recent boom in local technology startups speaks volumes about what the future holds for the region.
In particular, for countries like Singapore, Indonesia, Malaysia and Thailand, there is impetus for industries like financial services, technology, media & telecommunications (TMT) and the public sector to embrace digital.
“The converging of trends such as analytics, mobile, collaborative consumption, social and wearables in a hyper-connected world is creating endless possibilities. And that’s not talking about the emerging trends. Already, our clients are finding that while the cost base can be compressed, customer expectations are skyrocketing. Only by embracing digital can they compete and win,” says Mr Rees.
One way organisations can remain competitive is to have a business purpose to the use of technology in the way they engage their consumers.
Customers are leading the data and digital revolution, and are more empowered to tell businesses what they want. The businesses that listen are the ones that are responding successfully to digital disruption and staying ahead of the pack.
Businesses will also do well to invest in digital technology platforms and to get their infrastructure right. There also needs to be a culture change within the organization, beginning with buy-in at the most senior levels of an organisation. Continuous improvement must be made, adopting a change-agile mindset – agility in platforms, people and planning.
However, this process of innovation - integrating platforms, people, and planning - can be a constant challenge. It is important to consider carefully not just where to innovate but how. The ‘best of the best’ have a very clear hypothesis and focus on the ‘end game’, and ride the waves of digital disruption with finesse.
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